Shares of construction services provider Emcor Group (EME 3.51%) had plunged 17% on Thursday by 12:35 p.m. ET.
Emcor is a large-cap, diversified provider of construction services, and it has caught fire this year on the back of demand for artificial intelligence (AI) data centers, which has bolstered its electrical services segment.
Despite beating analyst expectations on both the top and bottom lines this morning, Emcor fell, as its forward guidance wasn't enough to satisfy investors after a 70% run in the stock in 2025.
NYSE: EME
Key Data Points
Emcor sees the perils of high expectations
In the third quarter, Emcor grew revenue 16.4% to $4.3 billion, while earnings per share (EPS) grew slightly slower at 13.3% to $6.57. Both figures beat analysts' expectations, despite the slight margin compression. The star of the show was Emcor's Electrical Construction & Facilities Services segment, which rocketed 52.1% in the quarter. All of Emcor's other segments grew in the low-to-mid-single digits.
So what was the problem? Likely, full-year guidance. For the year, management now expects between $16.7 billion and $16.8 billion in revenue, whereas last quarter's guidance was for between $16.4 billion and $16.9 billion, a wider range with a higher top limit. And while the company raised the bottom end of its EPS estimate range, it didn't increase the top end, keeping it at $25.75 despite the quarter's beat.
Another positive was remaining performance obligations, which are long-term contracts that have yet to be fulfilled. That figure grew 29% to an all-time high of $12.61 billion.
Still, it appears the near-term guidance was enough to cause a round of profit-taking in the high-flying stock.
Image source: Getty Images.
Emcor is a decent value
After today's plunge, shares trade at 25.6 times 2025 earnings estimates. That's not exactly cheap, but it's also not overly expensive for a company that stands to benefit from the demand for data centers.
Emcor's AI-exposed electrical segment made up about 31% of Emcor's U.S. operations -- the company is divesting its UK operations -- and as that segment makes up a greater portion of the business, overall growth should hold steady or perhaps even accelerate. This is a stock worth investigating to potentially buy on the dip.
